The Franchise Association of South Africa, FASA, recently released the results of the 2017 survey, an annual report published outlining the changes that have occurred within the franchising industry in South Africa. The results of the survey proved to be very positive, demonstrating that the franchise sector in South Africa continues to flourish.
Franchising grows in a tight economy
When the Franchise Association of South Africa (FASA), together with sponsor Sanlam, commissioned Research IQ in 2013 to conduct a survey of the industry and track its growth, the world had been experiencing a recession for five years. The franchise sector has held its own over the past four years, despite trying socio-economic conditions, political uncertainty and tough trading conditions. The industry in South Africa has experienced positive growth during this period; the franchise sector’s contribution to the country’s GDP has increased from 9.7% in 2014 to 13.3% and its turnover is now estimated at R587 billion, compared to R465 billion in 2014.
“As a sector, we are doing great things in a tight economy,” says Tony Da Fonseca, FASA’s Chairman. “Tracking our success and looking for areas that need improving is part of the entrepreneurial nature that sets us apart as franchisors and franchisees. This is borne out of the fact that 78% of the franchisors surveyed are optimistic about future growth in their businesses.”
Two in three franchisors claim to have been in business for more than ten years. This longevity supports franchising as a successful and viable business model. Sanlam, the sponsor of the FASA Franchise Survey, also tracks the continuity and planning provisions that franchisors and franchisees make as part of their business strategy. “It is encouraging to note,” says Kobus Engelbrecht (Marketing Head, Sanlam Business Market), “that the majority of franchise owners (95%) claim to have an investment portfolio largely comprised of retirement annuities and property. Confidence in their business choices and the immediate future is reflected in the fact that selling their franchise within the next 12 months is not on the cards for 97% of franchise owners.”
“The franchising industry continues to make a healthy contribution to the South African GDP,” concludes Vera Valasis, FASA’s Executive Director. “Benchmarking where we stand on the world franchise stage puts South Africa 36th in a list of 181 countries – between Singapore, Malaysia, Ireland and Pakistan in 34th, 35th, 37th and 38th place respectively – a position we can be greatly proud of.”
Survey highlights:
- According to the FASA website, the largest franchise sector is fast foods and restaurants (25%). The retail sector is the next largest, at 15%, followed by the building, office, and home services sector at 13%. Similar in size are childcare, education and training and automotive products and services (9% each), and health, beauty and body culture at 8%.
- The employee count came to 343,319, with the retail sector being the biggest employer. 65% of employees are black, 24% white, 6% coloured and 5% Indian. The number of black employees has increased by 8%.
- 25% of franchises are owned by women. The sectors with the highest incidence of female ownership are the health, beauty and body culture and the childcare, education and training sectors.
- 31% of the franchisors interviewed claimed to have stores outside of South Africa. Most of these stores are to be found in the neighbouring countries of Namibia and Botswana. Proximity to neighbouring countries, in comparison to countries further afield in East or West Africa, makes them popular choices for expanding outside of South Africa. One in eight franchises claimed to be an international brand, represented outside of Africa.
- 59% of franchisors have business units in shopping centres and 62% are located on high streets, where most passing trade occurs. A quarter of the franchised outlets are operated from a home base or in an industrial area.
Franchise Direct provides many options for those seeking franchise opportunities in South Africa. Take a look at the wide range of industries you can choose from on our industry page.
Information and statistics courtesy of the Franchise Association of South Africa.